Thursday, September 14, 2017

SPIRE-inspired TM suit fails to enjoin noncompetitor

Spire, Inc. v. Cellular South, Inc., 2017 WL 3995759, No. 17-00266 (S.D. Ala. Sept. 11, 2017)

Spire, a provider of natural gas fueling services, sought a declaratory judgment against Cellular South, d/b/a C SPIRE, a wireless telecommunications provider that also provides television and internet services, for noninfringement/nondilution, and Cellular South sought a TRO/PI in return. 

Cellular South began doing business as C SPIRE in late 2011.  In late 2012, the entity now known as Spire chose the Spire mark and began using it for its natural gas stations, displayed in a combination of gray, blue and white.  In 2013, LXE and Cellular South entered into a coexistence agreement; LXE used “Spire” for antennas for infrastructure, not sold to ordinary consumers.  In 2014, now-Spire’s rebranding as Spire spread, and Spire was registered for fueling stations and used on a national website.  In a 2015 trademark search, now-Spire identified C SPIRE as one of the results in 596 pages of results; now-Spire considered it irrelevant because it wasn’t in the same business.  There were over 150 active registrations for Spire, including 15 in Alabama.  In 2016, Spire began rebranding most of its operations under the Spire brand name, including for promoting, offering and rendering natural gas marketing/fueling in Alabama, Mississippi, Missouri, and South Carolina.  Cellular South then sent a C&D and opposed Spire’s pending trademark registration.  Spire’s rebranding continued; as of August 2017, employees were wearing Spire hats and ID badges but had yet to get new uniforms, and vehicles were being updated.

Cellular south cited 2016 and 2017 market surveys for Mississippi indicating C SPIRE has a “high brand preference” and the general health of the brand is “very strong,” with 88% brand awareness in that state.  The court found that the mark was at least “well known” in Mississippi, but evidence didn’t support strength claims for other states.  Spire submitted significant evidence of competing uses in many states, rendering the term “heavily diluted nationwide.” “Cellular South has not established a substantial likelihood of showing that its mark is arbitrary and thus entitled to the highest protection.” [Yes, this conflates conceptual with marketplace strength, but it doesn’t seem to make a difference.]

Mark similarity:  Cellular South’s witness testified that Cellular South’s logo will be confused with Spire’s logo because “the average consumer driving down the road at 55 miles per hour seeing a billboard will likely think Cellular South altered its logo and changed its color to orange.” The court found that the marks differed somewhat: Spire’s mark is orange, with block lettering in a specific font, and has a symbol after the lettering (two staggered semi-circles, representing a handshake). Cellular South’s mark is blue, with rounded lettering in a different font, and has a symbol before the lettering (a “c” with beams of varying lengths surrounding it). They were pronounced differently: one versus two syllables, and one using “c” while the other didn’t. Cellular South also made prior representations to the USPTO (in the Honeywell agreement) that its use of the letter “c” in its logo sufficiently distinguished it from another “spire” mark.  The context was distinguishable (businesses involved in infrastructure, not common consumers) but that argument was still relevant.  Overall, the colors differed, the fonts differed slightly, the spacing differed slightly, and the art differed, making the overall impression distinguishable. Similarity weighed slightly in Cellular South’s favor.

Product/service similarity:  Cellular South argued that local and long distance transmission of telecommunications was similar to Spire’s  “local and long distance transmission of gas”: Cellular South has 7,000 miles of fiber cable underground and Spire supplies natural gas through underground pipelines.  Also, “someone may move into a new home or office and need to set up phone, internet, television and gas. In that case, he or she could call C Spire for the first three and Spire for the last.”  Cellular South planned to expand into lighting controls, thermostats, CO2 detectors, etc. for the household, and argued that Cellular South was a utility like Spire.

The court disagreed.  “Spire’s natural gas energy services are distinct and unrelated to Cellular South’s telecommunication goods and services.” They don’t compete, and, as Cellular South told the USPTO, its buyers sign up for phone or computer services not “by mistake” nor “without full knowledge as to the source of those services.”  

There was also no evidence of actual confusion.  Jacob Jacoby did a survey and concluded that “it is highly unlikely that any consumers seeking telecommunications services would call a natural gas company for such services, or think that one is linked with the other – noting only 2.7% of consumers may think the businesses could be associated.” The lack of relation between the parties’ services made confusion less likely.  Most interesting citation: General Motors Corp. v. Cadillac Marine & Boat Co., 226 F. Supp. 716 (W.D. Mich. 1964) (rejecting plaintiff’s theory that “public confusion automatically follows the use of the trademark ‘Cadillac’ upon any other product, no matter how unrelated it may be to Cadillac automobiles” and holding “[w]hile Cadillac cars and defendant’s Cadillac boats are means for transportation....they do not possess the same descriptive properties....This differential makes them void of inherent confusing characteristics.”....).

Indeed, the court, continued, “[c]ase law also suggests that direct or actual competition with the same or similar goods/services is required for an infringement claim to survive.”  V. interesting!  The court pointed to dilution as the appropriate cause of action for unrelated goods/services.  In terms of Cellular South’s claim to its “zone of natural expansion” in services, “the senior user of a mark cannot monopolize markets that neither his trade nor his reputation has reached.”  Being utilities delivered undergraound wasn’t sufficient similarity to weigh in Cellular South’s favor.

Similarity of customers and sales outlets between the entities: Cellular South argued that it used all types of advertising you can think of and sold to the general public, leading to inevitable overlap.  Spire responded that it didn’t use retail stores (consumers have to call Spire or use its website to sign up) and that the public couldn’t select from a long list of competing natural gas providers as it can for telecom providers.  “Cellular South’s advertising and sales argument is based on a faulty premise -- that Cellular South and Spire are using the same available channels of advertising to compete against one another…. Further, apart from stating its customers are homeowners and businesses, Cellular South has not shown how a cell phone or internet customer is similar to a natural gas customer.”  [Well, they probably often are the same person, but they could be thinking about different things for different purchases.]

Similarity of advertising methods: the court found this factor neutral, given Spire’s arguments that the content of its ads were very different, despite the similar media.  “[W]hile both companies may use the same or similar advertising methods and styles, because the companies are not competitors in the telecom industry, they are necessarily communicating distinct and different advertising messages to different audiences.”

Intent: Cellular South didn’t show that Spire had a conscious intent to capitalize on its reputation/goodwill, was intentionally blind, or otherwise manifested improper intent in adopting its mark.

Actual confusion: Cellular South’s confusion arguments were linked to its future plans to “own the home” – it recently applied to register its marks for home automation and security services (alarm services – alarm systems, CO2 detectors, thermostats, garage door openers, lights, AC, door locks, lighting controls, etc). But Spire has no plans to go into the telecom and internet business.  And Cellular South couldn’t show actual confusion; there were no instances of both companies advertising in Alabama and Mississippi.  Its survey found that, after viewing the company’s logos, “just shy of 37%” of consumers were confused, thinking Spire was affiliated with Cellular South.  Spire criticized showing only the bare logos to participants, which the surveyor justified by arguing that Spire wasn’t yet in the marketplace and that isolated logos are common (e.g., on a headset or jumbotron). The surveyor also testified that there might be confusion and inconvenience with customer call centers, and that a Spire catastrophe could affect the image of Cellular South.  Jacoby responded that Cellular South’s expert used the wrong universe (testing Spire’s customer base, not Cellular South’s), wrong stimuli (logos without context), and wrong protocols (no control group!).

The court found no evidence of actual confusion, just conjecture and speculation by Cellular South. “At most, the evidence, per Dr. Jacoby, indicates that 15.3% of consumers thought a telecommunications business and a natural gas business could be associated. Association, however, is not de facto confusion.” On balance, there was no likely success on the merits.

Alabama and Mississippi Trademark dilution: 15 U.S.C. § 1125(c)(6) states that “[t]he ownership by a person of a valid registration ... on the principal register under this chapter shall be a complete bar to” a state law dilution claim.  But Cellular South is challenging the Spire registration.  While that was pending, the court wouldn’t dismiss the state-law dilution claims as preempted.

Both states protect marks that are “famous and distinctive.”  Fame meaans “widely recognized by the general consuming public of this state or a significant[ ] geographic area in this state as a designation of source of the goods or services or the business[ ] of the mark’s owner.”  For Alabama, there was no evidence that the C SPIRE was “famous” in Alabama before Spire’s first use of the “spire” mark in December 2013. For Mississippi, the evidence of fame was from 2016, years after Spire’s first use of a version of the “spire” mark in December 2013. However, since Spire used other versions of the mark in 2016, there was “some” evidence of C SPIRE’s fame at that time.  “[E]ven assuming arguendo that the C SPIRE mark was famous in Mississippi as of March 2016, Cellular South still has to submit evidence showing that the public associates (or will likely associate) the same mark with both Cellular South and Spire, and that such association infringes on Cellular’ South’s rights ‘by preventing the mark to serve as a unique identifier of the senior user alone.’” While it was a close case, the court found that Cellular South hadn’t shown a substantial likelihood of success on the merits.  (Could it be a close case overall if the Spire registration might be valid?)

Irreparable harm: eBay applied to trademark cases. Cellular South argued that the threat of lost control over its reputation was irreparable harm.  But “Cellular South and Spire do not produce/sell (or associate with) the same goods/services such that one would logically (or necessarily) ‘be at the mercy’ of the nature and quality of the goods/services of the other.”  Cellular South’s evidence was speculative: e.g., “risk of a gas leak,” theoretical “negative customer experiences,” “negative social posts” incorrectly linked to, or associated with, Cellular South. But Cellular South also emphasized the hundreds of millions of dollars and thousands of hours it has invested to to create trust in its brand. Here’s a good quote for defendants in non-competing goods cases: “The Court finds it incongruous for Cellular South to argue how famous and well known its name is and how vested it is with its customers and communities as a trusted brand, yet to simultaneously ask the Court to conclude that Spire’s use of a mark – in a different industry, with a different business, selling/providing different goods/services – is on the verge of causing the imminent loss or destruction of all of those dollars and work hours unless an immediate injunction issues.” 

Plus, Cellular South’s delay in seeking injunctive relief argued against irreparable injury; it knew of Spire’s rebranding plans at the latest in March 2016, when it sent a C&D.  Then Spire sued for declaratory relief in June 2017.  Cellular South only moved for injunctive relief in August 2017.  The potential for a slow rollout of Spire’s rebranding didn’t justify disregarding the March 2016 letter, which “indicates that Cellular South thought the harm or injury was actual or imminent at that time, not prospective, potential or possible, yet failed to seek injunctive relief.” And in February 2017, Spire notified Cellular South that it was already rebranding and that the process would finish by the end of 2017.  Whether Cellular South’s delay was a few months or 18 months, it undercut any urgency.

The balance of harms weighed in favor of Spire, given that it had already started operating under that mark and it had invested substantially in rebranding since 2016. Nor, of course, did the public interest favor an injunction.

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